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This includes the refining of crude oil and the processing of natural gas, and the marketing and distribution of products. Natural gas distribution is one of the fundamental segments of the downstream sector, as it plays a vital role in heating and power generation.
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South Africa has the second largest refinery capacity in Africa, with four of its refineries located in Cape Town, Durban and Sasolburg, two located inland, and gas-to-liquids plants located at Sasolburg, Secunda and Mossel Bay. By virtue of its mature downstream industry, South Africa is well placed to serve as a hub for providing services and expertise in the oil and gas sector in Africa.
These firms operate storage terminals and distribution facilities at all major ports. The principal legislation governing transport of crude oil is the Petroleum Pipelines Act of To manufacture, retail or conduct the business of a wholesaler of petroleum products or to hold or develop a site, the corresponding licences must be obtained.
The Controller of Petroleum Products, represented by the DDG: Hydrocarbons and Energy Planning under the DoE, is the statutory authority mandated to issue manufacturing, wholesale, retail and site licences. In addition, the Controller is responsible for investigating offences and gathering information in relation to petroleum products. The government regulates wholesale margins and controls the retail price of petrol and diesel, and petroleum prices are regulated based on import parity price formulas.
Licensing for manufacturers, wholesalers and retailers of petroleum products is governed by the Petroleum Products Act, which covers a wide range of other downstream marketing activities. Wholesale and retail licences are valid for as long as a business is a going concern and do not need to be renewed.
A retail licence will only be granted provided the site to which it relates is also licensed. Companies are required to obtain such operating licences in order to establish new service stations and distribute petroleum products, and these are normally granted subject to conditions, including but not limited to B-BBEE and environmental issues. The number of licences allocated is limited by the government, and manufacturers and wholesalers are prohibited from holding retail licences except for training purposes.
Breach of local content requirements forming part of the licensing conditions would constitute a breach of the licence and could lead to the revocation of the licence. The Petroleum Products Act provides that in the event of a contravention of the Act, the Controller of Petroleum Products must by written notice direct a person to cease such activity forthwith. The Controller of Petroleum Products may, in accordance with section 2 2 A b , allow a person to continue with a prohibited activity contemplated in the Petroleum Products Act pending an application to carry on the prohibited activity and the issuing of a licence if the cessation of such an activity is likely to lead to a material interruption in the supply of petroleum products.
The downstream sector in South Africa is highly integrated throughout the value chain from production and refining of products to transportation, depots and storage facilities around the country and finally distribution to service stations and customers. South Africa has a historic reliance on oil and gas imports, so a robust and efficient delivery system goes some way to reducing risk.
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One of the main challenges is security of supply, which in this case refers to the development of supply chain solutions for supply challenges, demand management issues and emergency response. Although the downstream industry is well served in its infrastructure needs, some facilities have not been upgraded for many years, lack maintenance and operational efficiency, and do not meet modern technological standards.
Infrastructure in South Africa may be the most comprehensive and modern on the continent, but in a global market for petroleum products, South Africa has to ensure its facilities match the global competition. In an effort to address some of these environmental issues, the Oil Industry Environment Committee was established.
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